State utility regulators are recommending a major expansion to Southern California energy supplies to compensate for the recent retirement of the San Onofre Nuclear Generating Station.

Investor-owned electrical utilities San Diego Gas & Electric and Southern California Edison would each be authorized to seek as much as 700 megawatts worth of new-power capacity and clean-energy resources by 2022, under the proposal overseen by utilities Commissioner Mike Florio and released Tuesday.

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The early retirement of San Onofre in north San Diego County has touched off a tug-of-war over how to replace its air pollution-free nuclear power without derailing California’s environmental goals or overinflating utility rates. The utilities commission, which has authority over most utility spending to ensure reliable electricity, is looking ahead to make sure additional power resources are bid, contracted and built starting in 2018 when needs may become critical in San Diego, Orange County and portions of the Los Angeles Basin overseen by Edison.

Under the proposed ruling, SDG&E would be required to offset at least 200 megawatts of electricity demand with clean-energy alternatives such as energy efficiency upgrades, reliable conservation measures, renewable energy or energy storage devices.

Another 500 megawatts of power capacity would be open to both fossil fuels and green alternatives under an “all-source” bidding scheme. California energy policy gives priority when feasible to energy efficiency, conservation and renewable technologies ahead of natural gas-fired power plants (coal and oil generation have been largely phased out).

Sierra Club Senior Attorney Matt Vespa applauded the proposal for allowing utilities room to procure as much clean energy as they find feasible.

“I was glad to see that there was no exclusive fossil fuel requirement here,” he said. “They’re seriously looking at competition among all resources.”

Vespa cautioned that SDG&E appears to be prematurely positioning itself to fill the all-source requirement with natural gas power.

The proposed decision leaves open the possibility of replacing the 60-year-old Encina Power Station at Carlsbad with a new, adjacent natural gas plant already permitted by the state, according to a spokeswoman for the SDG&E. SDG&E has publicly expressed interest in negotiating a power contract with Encina owner NRG Energy, while also exploring the creation of an “energy park” adjacent to the San Onofre plant that would include natural gas generators.

SDG&E declined Wednesday to comment further on the commission proposal while a decision is still pending.

Edison and SDG&E have sufficient power supplies to meet projected demands in the San Onofre area through at least 2018, according to the proposed decision.

The five-member California Public Utilities Commission can vote on the proposal as soon mid-March, after comments are received from interested parties. Changes can be incorporated up until the vote.

The commission proposal set a higher clean-energy bar for Edison, setting aside at least 400 megawatts of its allocation toward alternatives to fossil fuels.

San Onofre’s 2,200-megawatt reactors once provided for 20 percent of San Diego’s energy needs, while also providing the voltage support necessary to import electricity from far away during peak demand periods. The plant went offline in January 2012 in response to a radiation leak — later traced to the rapid degradation of massive steam generators replaced in 2010 and 2011. Edison retired the plant for good in June of last year.

Consumer groups are likely to challenge the need for so much new power generation. The commission proposal, however, rejected requests for even more power generating capacity to guard against outages by the state’s main grid operator, the California Independent System Operator. Cost-benefit considerations were cited.

The Pio Pico Energy Center, a quick-start 305 megawatt, natural gas power in Otay Mesa approved Feb. 5 by the commission, will not count against energy needs cited by the commission.

Natural gas generation at existing plants has largely filled in for power once generated by San Onofre, significantly increasing California's emissions of greenhouse gases linked to climate change.

California is on target to meet its mandated goal of reducing emissions of heat-trapping greenhouse gases to 1990 levels by 2020. But the state will have to dramatically transform its energy sector to meet its 2050 goal of reducing emissions to 80 percent below 1990 levels, the California Air Resources Board said in a report this week.